Mining Safety Halts
Silvercorp and Santacruz Halt Mine Operations for Critical Safety Upgrades After Fatal Incidents
Anonymous
Key Points
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Silvercorp's Ying Mining District and GC mine are forecast to see a much larger production hit in the July–September quarter than previously noted, with Ying down 40%–50% and GC about 50% as safety upgrades are implemented and restart is staged.
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The company has engaged five certified contractors to install the mandated Six Major Safety Systems at the affected sites, at an estimated cost of about $5.5 million, with an additional roughly $6 million expected for other safety improvements (e.g., fire-resistant cables).
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Santacruz Silver Mining’s Reserva mine incident occurred on June 24 around 6:30 pm (end of the third shift); preliminary findings indicate the incident may have involved a deviation from established safety procedures, prompting an immediate precautionary suspension and a comprehensive, transparent investigation with authorities and external experts.
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Silvercorp’s stock activity surrounding the news showed a modest move: closing up 0.46% at $10.92 on the NYSE, with after-hours trading down about 2.7% to around $10.63.
Silvercorp Metals is temporarily cutting output at its two Chinese silver mines by up to 50% to install new government-mandated safety systems, following a fatal accident in May. The company expects to spend roughly $11.5 million on the upgrades and estimates a 50-day timeline before full operations can resume, according to Silvercorp Metals.
The move comes as China's National Mine Safety Administration launched nationwide inspections across all underground mines after several high-profile disasters. Silvercorp's stock closed up 0.46% at $10.92 on the NYSE, but slipped about 2.7% in after-hours trading to around $10.63 as investors digested the scale of the production hit, GuruFocus reported.
Fatal May Accident Triggers China's Sector-Wide Safety Crackdown
A worker died at the SGX mine inside Silvercorp's Ying Mining District in Henan Province in May. That single fatality set off a chain reaction. Chinese regulators ordered cross-sector safety inspections at every underground mine in the country. Silvercorp announced the operational slowdown on June 25, according to The Deep Dive.
The government's mandate centers on installing the "Six Major Safety Systems" — a package of six technologies required in all underground mines. The systems include real-time gas monitoring, worker-location tracking via radio chips, sealed emergency refuge chambers, compressed-air rescue lines, emergency water pipes, and blast-proof communication lines. No mine can operate at full capacity without all six in place.
Production at Ying and GC Mines to Drop by Half This Quarter
The July–September quarter will take the heaviest blow. Silvercorp projects output at the Ying Mining District will fall 40% to 50%. The GC mine faces a similar drop of around 50%. Regulators are using a staged approach — each level of a mine can restart only after inspectors sign off on that level's upgrades, TipRanks reported.
Silvercorp has hired five certified contractors to speed up the installation. The mandated Six Major Systems will cost an estimated $5.5 million. An additional $6 million covers other improvements, like swapping in fire-resistant cables. The total bill comes to roughly $11.5 million. Analysts at BMO Capital Markets called the expenditure a manageable "one-time hit" that protects the company from a total regulatory shutdown.
Santacruz Silver's Bolivia Mine Halts After June 24 Fatality
The safety crisis is not limited to China. On June 24 at around 6:30 pm — the end of the third shift — a worker was fatally injured at the Reserva mine in Bolivia, operated by Santacruz Silver Mining. The company immediately suspended all operations at the site as a precautionary measure.
Preliminary findings suggest the worker may have deviated from established safety procedures. Santacruz CEO Arturo Préstamo said: "We are deeply saddened by this loss. Safety is our top priority, and we are conducting a comprehensive, transparent investigation alongside authorities and external experts to ensure this never happens again." Bolivian mining authorities are involved in the probe.
What Investors and Regulators Watch Next in the 50-Day Window
The next 50 days are critical for Silvercorp. China's zero-tolerance policy on mining deaths means any further incident during the upgrade phase could trigger permanent revocation of the Ying or GC mining permits. The staged restart model means revenue will recover slowly — level by level — rather than all at once, GuruFocus noted.
For ESG-focused investors, the spending is seen as necessary. A fatal accident carries a far higher long-term cost than a temporary production drop. For short-term traders, the "40–50% production cut" is the headline number driving selling pressure. Silvercorp's management framed the shutdowns as "precautionary and proactive," arguing the upgrades will "reduce future risk and potential penalties."
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